Damaged Joplin property may prompt tax relief
Monday, August 8, 2011
Businesses destroyed by a deadly tornado in Joplin remain on property tax rolls as if their buildings were standing and their cash registers were ringing, and a southwestern Missouri lawmaker is hoping some property tax relief could be considered for firms that are unable to bring in revenue because of the damage from the powerful storm.
At issue is how Missouri handles property taxes. In many counties, Jan. 1, is the key date for determining the value of property and the ability to tax it. However, some counties have adopted ordinances that allow new residential properties to be added to the tax rolls when they are occupied in the middle of the year and that permit homes to be removed from tax rolls when destroyed by natural disasters and therefore made uninhabitable. The property tax policies affect residential property and not businesses.
In other words, the owner of a house that cannot be occupied mid-year because it has been so badly damaged would pay property tax for the land over the entire year but would not owe property taxes on the structure after it was destroyed.
The distinction between homes and business has gotten attention because Jasper County, which is home to Joplin, has adopted the ordinance that allows uninhabitable residences to be removed from the tax roll.
A tornado that struck May 22 killed 160 people and damaged or destroyed about 8,000 homes and businesses in the Joplin area. The powerful tornado cut a path several miles long and struck residential neighborhoods and many businesses in the southwestern Missouri city.
State Rep. Bill White said several people who owned commercial property in Joplin have told him that the property tax situation has added to their financial hardship because the tax is owed for damaged or destroyed buildings that are not generating revenue right now. White, R-Joplin, said it makes sense for businesses to be eligible for treatment similar to that for residential property.
“It seems very unfair to the businesses,” he said.
The vice chairman of a state House committee created to examine recent natural disasters, White said he would like lawmakers to consider property tax policies in a special session if there is time rather than waiting until next year because it would allow changes to help with the recovery in Joplin rather than serving as an option for the future. But White said he was not sure whether or not there would be enough time to address property taxes.
“I would love it in a special session because we could then affect what is happening now,” White said.
Gov. Jay Nixon has said that he will call a special legislative session in September that was to include an economic development package, a delay to the state’s presidential primary and disaster recovery.
This year, the state has faced flooding along the Mississippi and Missouri rivers and tornados in Joplin, St. Louis and Sedalia. Part of the discussion on disaster recovery has involved whether or not to use Missouri’s rainy day fund to help cover some of the recovery costs.
Allowing destroyed Joplin businesses to be removed from the tax rolls might offer a financial reprieve to some commercial property owners, but it also could reduce some of the revenue collected by local governments. Overall, however, the property tax policy can cut both ways for the governmental bodies that depend on revenue from property taxes. An attorney for the state Tax Commission said many local governments have liked the occupancy polices because it means they can get tax revenue quicker in good economic times when the population is growing and new homes are being built.
State tax records show that 46 counties have adopted property tax policies that allow residences to be added to property tax rolls when they are occupied and to be removed when structures are destroyed. Those are scattered across the state and include many of the most populated areas, including St. Louis, St. Charles, Jackson and Greene counties. Small, rural counties have joined in too, including Schuyler County in northeastern Missouri on the Iowa border, DeKalb County in northwestern Missouri and Dunklin County along the Arkansas border in the Bootheel.
Although many other rural counties have not adopted the property tax ordinances, several more densely populated counties have not either. Boone County that is home to Columbia has not. And neither have Platte County near Kansas City, Buchanan County that is home to St. Joseph and St. Louis city.
Among those that could get some relief from changes in how property taxes are handled is Jeff Majzoub, who is a co-owner for Yorktown Properties, which lost two office buildings and three retail strip centers because of the tornado in Joplin. He said some property tax changes could help free some money for reconstruction.
“If they would give us a break, they could add them back to the tax rolls when they get back in service,” Majzoub said.
EDITOR’S NOTE — Chris Blank has covered state government and politics for The Associated Press since 2005.